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HM Revenue & Customs (HMRC) has laid out the extent of its digital transformation challenge and revealed the breadth of its virtualised infrastructure and the challenges ahead.

Discussing its changing customer relationship with SAP at the company's Innovation Forum in London yesterday, Hardik Shah, deputy director in the Chief Digital and Information Officer group at HMRC, discussed the how far the department and its SAP estates are now virtualised.

The event showcased SAP’s move beyond enterprise resource planning (ERP) into areas such as digital transformation, real time information, data analytics, the Internet of Things (IoT) and the Boardroom of the Future.

During his presentation, Shah detailed the extent to which online services are being used by both individual and business customers and how HMRC is managing to improve efficiency in its communication channels, for example, by using Webchat.

Shah first outlined the extent of HMRC’s business: its revenues of nearly £540bn, its plans to reduce its baseline costs by 15% by 2020, and its 50m customers (5m business and 45m individual customers).

HMRC, he said, was one of the most digitally advanced tax administrations in the world as well as being one of the most technologically progressive workplaces. Outlining its strategy and key deliverables by 2019/20, Shah discussed how HMRC is looking to gain £5bn revenue each year, achieve £717m in sustainable savings, increase employee engagement and bring phone and postal contact down 55% as well as delivering tax accounts for businesses and individuals.

Shah was keen to emphasise HMRC’s multi-channel approach to engaging with customers , comprising digital service, social media, webchat, co-browsing, telephone and face to face. He pointed out that it is routine for most webchat operators within HMRC to be able to manage separate conversations at the same time with three customers, with the best managing four or even five simultaneously.

Transformation is continuing at pace for customers, he said. HMRC has launched 18 new digital services in the last year, and 5m businesses can now access their business tax account. 8m out of 45m individual customers are currently using their personal tax account, and a million tax credit renewals have been carried out online as well as a million changes of circumstances notified.

Discussing HMRC’s move towards adopting a more flexible, virtualised infrastructure to underpin the department’s transformation, Shah pointed out that 50% of HMRC’s infrastructure is now virtualised, with 95% of its SAP estate virtualised on private cloud. Adopting a virtualised infrastructure means it has a greater ability to be able to move work between providers as well as a reduced cost base and increased flexibility.

Discussing SAP’s role, Shah said the company was playing a key role in helping HMRC transform its platforms, notably internally in terms of finance and HR, but also externally in HMRC’s tax platform for businesses.

He also outlined how APIs are a key part of the equation, enabling the creation of more sophisticated business software products, an ability for apps and tools to share data with HMRC as a matter of course, error checking in real time, and agents and accountants to see the same information as their clients.

Shah also discussed how HMRC is going paperless through automation. HMRC’s Digital Mail and Central Print services, for example, is creating a single, digital view of customer contacts, with 18m inbound mail items being scanned. It has also adopted robotic process automation with a tax credit dashboard reducing average call time by two minutes. The adoption of fully submittable iForms has seen the creation of 250 forms, with 990,000 submissions where customers can track progress of their query or transaction online.

Summing up, Shah described HMRC as already one of the UK’s most digital organisations, adding that its current transformation is probably the biggest in its history, with HMRC at the forefront of a revolution in the way government delivers services to its customers and to its staff.